The Crown Resorts Ltd (ASX: CWN) share price has reacted negatively to the latest bad news. Allegedly, Crown tampered with pokie machines, even though they are already weighted towards 'the house'. Crown also allegedly instructed some staff to avoid anti-money laundering reporting rules enforced by the regulator AUSTRAC. Crown rejects the allegations.
The market tends to shoot first and ask questions later when it comes to bad news. I think that could be the case here.
Crown shares are already trading near multi-year lows of $10.03 in September 2015 and that price was before Crown's recent share buyback.
Firstly, nothing has been proven at this stage. Not only that, but who knows if there would even be a significant fine – it could easily be immaterial to Crown's earnings. Thirdly, the share price reduction may ignore the long-term growth prospects of Crown including:
- Crown Sydney being completed
- The new hotel in Melbourne being completed
- Crownbet continuing to flourish
- Any other large expansion moves, such as Crown looking at Japan as the next place to expand
Crown's share price could drop more as these revelations unfold but I think any price reduction just makes Crown more attractive.
Foolish takeaway
Crown is currently trading at 20x FY18's analysts' estimated earnings, with a partially franked committed dividend yield of 5.34%. I am close to pushing the buy button at this price, but I will wait to see what happens over the next few days.
